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Monday, April 16, 2012

And we thought the launch of Lipitor generics involved some complicated issues…

When Teva Pharmaceutical Co. Ltd. announced on March 30 the launch of an authorized generic of its Cephalon subsidiary’s wakefulness drug Provigil (modafinil), we were surprised.

We, like most of the free world, believed that modafinil generics would not be primed to enter the U.S. market until April 6 – the entry date that several companies (including Teva USA, Mylan Pharmaceuticals, and Ranbaxy Laboratories) had agreed to under years-ago patent settlements with Cephalon. Plus, we knew Par Pharmaceutical would be a player as well, thanks to the Federal Trade Commission’s requirement that Teva supply Par with generic modafinil tablets for at least one year, with market entry no later than April 6.

Teva Ltd.’s authorized generic announcement seemed to be an attempt to capitalize on its new ownership of Cephalon, giving it a one-week jump on other modafinil generics. We figured that the other ANDA filers, who were expected to share in 180-day marketing exclusivity, were probably none too pleased with Teva’s move. Probably neither was the FTC, which already had concerns about Teva/Cephalon having too much control over the modafinil marketplace.

But our surprise then was nothing compared to the reaction when we heard that Teva USA alone had been awarded 180-day marketing exclusivity on modafinil.

Huh?

FDA’s determination that Teva, as the first ANDA filer to certify against each of two Cephalon patents, was the sole holder of 180-day rights left us befuddled. Others, apparently, were just mad.

Also hopping mad was FTC. In an amicus brief filed in Mylan’s lawsuit, FTC said that had it known at the time Teva Ltd. bought Cephalon last year that Teva USA would have sole exclusivity rights for modafinil, it would have sought stronger remedies beyond merely requiring the generic manufacturer to enter into a supply agreement with Par.

FTC was quick to say that it takes no position on FDA’s interpretation and application of the Hatch-Waxman Amendments and governing regulations. Nevertheless, FTC’s assertion that FDA’s exclusivity decision “eviscerates the competitive incentives” in Hatch-Waxman is a pretty clear indication of what the commission thinks about its sister agency’s decision.

We’re looking forward to some interesting oral arguments Wednesday in a D.C. federal court on Mylan’s request for a preliminary injunction. In the interim, however, we’ve been mulling the whole Provigil mess and have come up with more questions than answers (that is, after all, what we do best).

So, lump these into the category of “Things We’d Like To Know”:

1. When did Teva USA realize it was the first to file on both Cephalon patents?

In a filing in its own lawsuit against FDA (subsequently dismissed), Teva USA said it was unaware that it was the first filer against both patents “until recently, after Teva Limited acquired Cephalon and corporate affiliates Teva USA and Cephalon were able to share the relevant regulatory information.” So, then, does that mean this interesting little factoid didn’t come out during the due diligence process before the acquisition was completed? We would have thought it would, given the commercial importance of Provigil, a billion dollar product, to Cephalon.

Or was it, in fact, knowledge that was out there but not seized upon without the help of some clever Hatch-Waxman lawyering? After all, Teva USA already had to have known it filed on the first day possible against both patents. Did that not at least raise the possibility that maybe Mylan and Ranbaxy (who were in on the first day against the first patent) didn’t file immediately on the second patent?

The details about the timing of the Paragraph IV certification filings leads us to our next question…

2. What Did FTC Know And What Did It Think?

In announcing a proposed consent order clearing Teva Ltd.’s acquisition of Cephalon on Oct. 7, 2011, FTC said that Teva USA, Ranbaxy, Mylan and Barr Laboratories (bought by Teva in 2008) all filed ANDAs on the first day possible, “making them all eligible for the 180-day marketing exclusivity period under the Hatch-Waxman Act.”

(FTC’s documents about the consent order did not reference Watson Pharmaceuticals, which some analysts also expected to launch April 6 with a share of 180-day exclusivity because of its certification against Cephalon’s second patent on the day it was listed. The commission and Watson previously had tussled over requiring CEO Paul Bisaro to testify under subpoena about whether Watson’s settlement agreement with Cephalon restricted the former’s ability to relinquish any marketing exclusivity rights it may have with regard to modafinil).

Did FTC receive information about, and review, the specific dates on which Paragraph IV certifications were filed against the second Cephalon patent as part of its clearance process for the Teva/Cephalon acquisition? Did this information not raise a red flag, since it seemed to be common knowledge that a slew of companies would be able to enter the market on April 6?

Clearly, if the commission had any worries about the potential for Teva to win sole exclusivity for modafinil, it could have demanded relinquishment or selective waiver of exclusivity as part of the proposed consent order. (Expect this to be a consideration in any future consent order approving a generic firm’s acquisition of a branded company, or vice versa. Call it the “Provigil clause.”)

When we asked FTC whether it reviewed the timing of the Paragraph IV certifications and whether this information raised any concerns, the agency said it could not comment because the information was non-public.

However, it seems that such information would have been important to the commission’s review of the acquisition. Besides, the Cephalon acquisition was not the first time FTC had examined some of these issues. In 2008, the commission sued Cephalon, alleging that the branded company sought to maintain its monopoly on Provigil by paying four ANDA filers (Teva, Ranbaxy, Mylan and Barr) more than $200 million to keep their modafinil generics off the market. That lawsuit is pending in Pennsylvania federal court.

Given that FTC would already have been on high alert for any concerns related to modafinil generic entry, it seems all the more likely there was a fundamental disconnect between FTC’s assumption of what the market would look like come April 6, and FDA’s final decision. Which leads us to our next question:

3. Would FDA really be all that upset if a court overturned its exclusivity decision?

We suspect not. Reading various documents filed in connection with the court case, one can’t help but feel a sense of reluctance by FDA in reaching its final decision on modafinil exclusivity.

We note with interest the Office of Generic Drugs’ April 4 letter in which it delivered the happy news to Teva that the company received sole generic exclusivity. The letter feels the need to point out that “the parties familiar with modafinil ANDAs appear to have operated under the assumption that there are multiple ANDAs that qualify for the 180-day exclusivity for modafinil.” These “parties” included FTC, the letter said.

In deciding that Teva’s exclusivity was triggered by the March 30 authorized generic launch, OGD writes:

“With control of the marketing of PROVIGIL, and of an authorized generic, Teva has every reason not to pursue final approval of ANDA 076596 and not to market a ‘true’ generic under that application.”

In a footnote, OGD talks about how it considered a harsher penalty for Teva and what effect this novel situation (whereby an ANDA first-filer’s parent company bought, and now controls, the branded product sponsor) might have on FDA policy moving forward:

“We have considered finding that Teva’s marketing of PROVIGIL upon its acquisition of Cephalon triggered its 180-day exclusivity, and believe that there is a strong argument for finding so. We have refrained from adopting that interpretation in this case, however, because that exclusivity, if it were triggered by Teva’s acquisition of Cephalon, would expire on April 11, 2012 and, given the multiple uncertainties in this case, Teva had no notice that FDA considered it to be running. Because of the potential for collusion between NDA holders and captive first generics, and the subversion of the statutory scheme that could result, the agency may in the future provide guidance on the effect of such a relationship between NDA holder and first applicant upon any claim for 180-day exclusivity.”

“FDA understands Mylan’s concerns. … Granting exclusivity to a generic manufacturer that is owned by the innovator manufacturer appears to thwart the Hatch-Waxman Amendments’ goal of bringing more generic drugs to market faster (i.e., because the generic manufacturer would have no incentive to compete against its related innovator manufacturer, or the generic could sit on its exclusivity indefinitely by not commencing commercial marketing of its product – which would trigger the start of the 180-day exclusivity period – thereby blocking any other generics from coming to market). … Nonetheless, final approval of Mylan’s ANDA hinges only on whether a previous ANDA was submitted containing a paragraph IV certification and the 180-day exclusivity period had run.”

Finally, we pose the question that we (naively?) thought would be the primary focus on the day modafinil generics entered the market:

4. What About Ranbaxy?

Under its recently finalized consent decree with FDA, Ranbaxy faced the loss, or potential loss, of exclusivity on up to eight ANDAs. The company has not publicly identified the ANDAs at issue. However, modafinil appeared to be the first product launch since the decree’s entry in January where Ranbaxy held a claim to 180-day exclusivity. With the generic Provigil story playing out the way it has, we may never know if modafinil was one of the eight.

Perhaps Wednesday’s oral arguments will shine some light on these and other questions we have. We anticipate having no trouble staying awake for that hearing.

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